Traditionally, wealthy families served as limited partners in private equity firms, which in turn backed portfolio companies. But over the last several years, family offices have begun hiring private equity professionals so they can invest in portfolio companies directly.
Not only do family offices gain more control over their investments, but they also skip the management fees previously paid to PE firms. Direct investing is expected to continue. “Family offices are staffing up their capabilities to invest directly,” says Paul Carbone, managing partner, Pritzker Group. “There is evidence to suggest that this is where a number of family offices are headed.”